Since its inception, the crypto market has been full of volatility and innovation. However, in 2024, a new trend emerged—the Memecoin-dominated 'super cycle.' This wave differs from previous DeFi, NFT, or Restaking ecosystems; it is not centered on technology-driven or application scenarios but quickly captures investors' attention through emotion, narrative, and short-term market momentum. As Murad stated in his 2024 Token 2049 conference speech, 'The essence of the crypto market is now driven by speculation.' Below, we will explore Murad's viewpoints, analyzing the driving factors, potential impacts, and risks of the Memecoin wave to interpret the current state of the crypto market and its possible future direction.
1. The essence of the crypto market: The 'super cycle' of the token production industry
Murad pointed out in his PPT that the essence of the current crypto market is a 'token production industry' rather than a true technology innovation industry. In other words, the core of most crypto projects is no longer providing actual technological breakthroughs or application scenarios, but rather attracting speculators through the issuance and distribution of tokens to drive short-term price increases. In this 'super cycle,' token issuance and circulation have become the hallmark of a successful crypto project, rather than the underlying technology or innovation.
The emergence of Memecoins is an extreme manifestation of this trend. Unlike traditional tech-driven projects, Memecoins do not require complicated technology or applications, relying instead on simple narratives and market resonance. Investors are no longer concerned about the underlying technology or long-term economic models of these projects; rather, they are drawn in by market sentiment and quick profit opportunities. The essence of this cycle is that market momentum and speculation have become dominant, leading the crypto market gradually from being tech-driven to emotion-driven.
2. The proliferation of pseudo-innovation and the shift in market sentiment
Murad believes that the speculative nature of the current crypto market is not accidental but a result of an excess of pseudo-innovative projects. In recent years, various crypto projects have emerged, but many do not possess true innovative value, instead filled with various schemes and unfair phenomena, such as:
Complex and unsustainable economic models: Many projects rely on large distribution schemes and complicated economic incentives, attempting to maintain token prices through multi-layer 'nested' designs, but these models are often difficult to sustain in the long term.
Massive token unlocks: Many projects tend to favor insiders and early investors in token distribution, making it difficult for ordinary investors to benefit from project growth, while insiders can quickly profit through unlocking mechanisms.
Smart contract traps and security vulnerabilities: As the complexity of smart contracts increases, various potential security risks arise, posing significant financial safety hazards to ordinary investors.
These factors lead to a decline in market trust, with investors gradually realizing that many projects' high technical barriers and complex economic models are not designed to protect user interests but rather for the profit and speculation of insiders. As a result, more and more people have lost confidence in these 'pseudo-innovations' and are turning to pure, simple investment opportunities—this is a significant reason for the rise of Memecoins. Memecoins do not rely on complex economic models or require extensive technical development; they have become a new market hot spot in a straightforward resonant form.
3. The 'vampire attacks' of Memecoins and the dilemma of tech tokens
In analyzing the Memecoin phenomenon, Murad introduced the concept of 'vampire attacks,' meaning that Memecoins attract substantial capital through extreme speculative behavior, weakening the market demand for other crypto projects, especially tech-based tokens. The rise of Memecoins indicates that the market is shifting towards a more short-term, purely speculative tendency, leaving projects reliant on technological breakthroughs and practical applications at risk of being sidelined.
Tech-based token projects usually require long periods of development and stable technical support to demonstrate their true value. However, compared to the rapid returns offered by Memecoins, such long-term investments appear overly slow and complex. Consequently, significant capital has flowed into Memecoins and other speculative tokens, further weakening the market foundation and influence of tech-based tokens. This phenomenon not only diminishes market confidence in tech-driven projects but also steers the crypto market further away from its original intention of technological innovation.
4. The explosive momentum of Memecoins and the 'reflexivity' effect
The cyclical prosperity of Memecoins is inseparable from the support of market momentum and the 'reflexivity' effect. The reflexivity effect, which is the self-reinforcing cycle of market prices and participant behavior, is the driving force behind the soaring prices of Memecoins. Murad explained that the early price increase in the market attracted more investors, further pushing up prices and forming a self-fulfilling trend. This phenomenon is particularly evident in the Memecoin market.
During the market cycle of Memecoins, several 'get-rich-quick' stories rapidly spread, and these simple narratives resonated with investors, generating massive market momentum. As prices rose, more and more investors were attracted in hopes of replicating past successes, with this market sentiment peaking in the later stages of the cycle. However, once momentum fades, market sentiment reverses, and prices can swiftly correct. Murad believes that this extreme market momentum brings short-term prosperity, but serious risks lurk beneath.
5. Macro social trends driving demand for Memecoins
Murad not only focuses on the internal structure of the crypto market but also explores the reasons for the growing demand for Memecoins from a macro-social perspective. He believes that current socio-economic trends provide fertile ground for the rise of Memecoins, including:
Rising living costs: The increase in housing prices, food prices, and basic living expenses makes it difficult for ordinary people to accumulate wealth within the traditional financial system, and the crypto market offers a high-return alternative.
Increased occupational uncertainty: With the rapid development of AI and automation, people's sense of security in traditional jobs is decreasing. More and more individuals hope to secure their economic future through high-risk, high-reward investments.
The intensification of wealth inequality: The widening gap between the rich and the poor has led more individuals to aspire to achieve the 'get-rich-quick' dream through investing in cryptocurrencies, and the rapid rise of Memecoins aligns with this demand.
Social loneliness and psychological needs: The fast pace of modern society has increased social alienation, and Memecoins not only offer opportunities for economic returns but also bring a new sense of belonging through community interaction.
These social trends collectively drive demand for Memecoins in the crypto market, causing them to become market hot spots in a short period.
6. Risks behind the Memecoin wave: The hidden dangers of a speculation-driven 'super cycle'
Although the rise of Memecoins has brought short-term market prosperity, Murad warns that this speculation-driven super cycle hides significant risks. The price growth of Memecoins relies on market momentum rather than the project's technological or application value. Once market sentiment reverses or momentum fades, rapid price drops could lead to serious losses for investors. Additionally, the prosperity of Memecoins might cause many new investors to suffer losses during market downturns, affecting the healthy development of the entire market.
Murad asserts that to achieve true sustainable development in the crypto market, it is necessary to return to rationality, reduce reliance on speculation, and focus more on technological innovation and community building. He emphasizes that those projects capable of standing strong after the Memecoin tide recedes will be the ones that genuinely create long-term value, not short-term fads dependent on emotion and market momentum.
7. Future considerations: Returning to long-term value and community building
In the face of the Memecoin 'super cycle,' Murad calls for the crypto market to reassess its structure and core values. He believes that the future development of the crypto industry should focus more on technological innovation, transparent token distribution mechanisms, and community building. Project teams should abandon the practice of purely relying on market momentum and return to empowering users and achieving long-term value.
In this new cycle, community will become the key to project success, rather than merely a tool for short-term speculation. Only those projects that truly balance wealth distribution and confer value to the community can survive and thrive in future markets.
Conclusion
The cyclical waves of Memecoins reflect the speculative tendencies of the crypto market and reveal deeper structural issues within the current crypto landscape. Murad's analysis provides us with a calm perspective, allowing us to see the risks and challenges behind the speculative-driven super cycle. As market sentiment fluctuates, the crypto industry needs to gradually move away from relying on speculation in this 'super cycle.'
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